2022 (1) TMI 199 - AT - Central Excise

Levy of penalty under Rule 26 of the Central Excise Rules, 2002 - availment of irregular CENVAT Credit - non receipt of raw material in their factory - no finished goods manufactured and cleared by them - neither any plant/machinery nor any electric connection to manufacture the finished goods - no corroborative evidences found - HELD THAT - A case has been booked against the appellants on the basis of investigation conducted at the end of Assistant Commissioner of CGST, Bhiwadi, Rajasthan. But no corroborative evidence has been brought nor any statement against the appellants placed on record whether the goods have been procured without invoice or not? Moreover, in their statement of the appellant it has been categorically stated that they have received the goods which has been used in the manufacture of final products and the same has been cleared on payment of duty. Therefore, in the absence of any corroborative evidence against the appellants, the penalties are not imposable on all the appellants. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Penalty under Rule 26 of the Central Excise Rules, 2002 imposed against appellants for irregular availment of Cenvat credit based on invoices issued by other parties.

Analysis:
The case involved the appellants appealing against the imposition of penalties under Rule 26 of the Central Excise Rules, 2002 for irregular availment of Cenvat credit based on invoices issued by M/s. Sypher Impex Alloys Pvt. Ltd. (SIAPL) and M/s. Star Delta Exim Pvt. Ltd. (SDAPL). The investigation revealed allegations against SIAPL and SDAPL for issuing invoices without actual manufacturing activities, leading to irregular availment of Cenvat credit. The appellants, directors of M/s. Gee Ispat Pvt. Ltd., were also implicated as they received Cenvat credit from a registered dealer, M/s. Skyward Rolling and Alloys Ltd. (SRAL), based on invoices issued by SIAPL and SDAPL.

The appellants argued that they had received goods against the invoices issued by SRAL and used the Cenvat credit in the manufacture of final products, paying the duty accordingly. They contended that there was no evidence against them regarding non-receipt of goods, and no investigation was conducted against the transporter. The appellants emphasized the lack of corroborative evidence to support the allegations against them, asserting that penalties should not be imposed.

The Adjudicating Authority upheld the penalties, but upon review, the Member (Judicial) found that no corroborative evidence was presented against the appellants. The appellants' statement confirmed the receipt and utilization of goods in manufacturing final products, cleared after duty payment. Given the absence of concrete evidence implicating the appellants, the Member (Judicial) concluded that penalties were unwarranted. Consequently, the impugned orders were set aside, and the appeals were allowed, granting consequential relief to the appellants.